In this paper, the nonlinear dynamic characteristics of a rotor system supported by ball bearings with pedestal looseness are analyzed. The model of seven-degrees of freedom (DOFs) rotor system is established by the Newton's second law, which comprises a pair of ball bearings with pedestal looseness at one end. Energy analysis of the original model states that the first two-order proper orthogonal modes occupy almost all the energy of the system, and it demonstrates that the reduced model reserves main dynamical topological characteristics of the original one. A modified proper orthogonal decomposition method is applied in order to reduce the DOFs from seven to two, and the reduced system preserves the bifurcation and amplitude-frequency characteristics of the original one. The harmonic balance method with the alternating frequency-time domain technique is used to calculate the periodic response of the reduced system. Moreover, stability of the two-DOFs model is analyzed based on the known harmonic solution by the Floquet theory.